1.18 The Home Office received Best and Final Offers in 1998 from three bidders. All three submitted bids to refurbish the Home Office's existing estate and using the existing Government building in Marsham Street as temporary accommodation during the refurbishment. However, two bidders proposed an alternative solution at 2 Marsham Street. One of these put forward a designed and costed scheme that demonstrated the potential value for money of this option. The then Permanent Secretary indicated that he considered this an attractive opportunity worth paying more for (if that was necessary).
1.19 The Home Office also had concerns about the prospect of moving out to alternative temporary accommodation in Marsham Street and then moving back again. There was particular sensitivity because the Immigration and Nationality Department suffered problems with a decant from Lunar House into the Whitgift Centre in Croydon at around the same time in 1998. The Home Office considered that it was impossible to quantify the risks associated with the decant, but that it would cause up to three years' disruption at the same time as IT business re-engineering was taken place. Furthermore, using the old Marsham Street building as temporary offices was also seen as a risk given its poor condition and bad reputation.
1.20 The Home Office tested the value for money of the Marsham Street option through further competition by requesting Further Best and Final Offers from all three bidders. During preferred bidder negotiation on the Marsham Street deal, the Home Office continued to compare the bid to its estimate of the net present cost of refurbishment. At financial close this was £578 million (net present cost), compared to the £460 million for the Marsham Street PFI deal.